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Is Space the Key to Bitcoin’s Future?

A satellite-based plan to broadcast bitcoin data could make the digital currency safer and more accessible, advocates say.

CubeSats are tiny, but they could one day be used to bring Internet to millions.

National Journal

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Alex Brown

April 24, 2014, 11:16 a.m.

If you think “bit­coin from space” sounds like a sci-fi Mad Lib res­ult, you’re prob­ably not alone.

But Jeff Gar­zik, who runs a one-man show known as Dun­ve­gan Space Sys­tems, doesn’t think his plan is far-fetched. A few in­ex­pens­ive satel­lites, he says, could provide fail-safe pro­tec­tion for the net­work bit­coin users rely on, as well as provid­ing ac­cess to bit­coin in areas that lack re­li­able In­ter­net.

As long as sup­port­ers get him enough fund­ing, he’s con­vinced his satel­lites will soon be spread­ing the bit­coin gos­pel around the world.

So why is this plan im­port­ant, and, more im­port­antly, can it work?

First, we have to un­der­stand how bit­coin works. All bit­coin trans­ac­tions (pur­chases made with the vir­tu­al cur­rency) are re­gistered in what’s known as a block­chain — a con­stantly-up­dated ledger that runs through a net­work of sev­er­al thou­sand com­puters. Those ma­chines provide the in­form­a­tion that all bit­coin users rely on to main­tain their ac­counts, as well as to and send and re­ceive trans­ac­tions.

Without ac­cess to a that net­work, users are cut off from their bit­coin wal­let — and the spend­ing power it con­tains.

Gar­zik’s plan aims to ex­pand the cov­er­age area to places where the cur­rent lack of In­ter­net ac­cess also cripples po­ten­tial bit­coin de­vel­op­ment — in­clud­ing much of the de­vel­op­ing world.

“Out­side West­ern na­tions, [a satel­lite data pro­vider] greatly re­duces the cost of ac­cess to the bit­coin net­work,” he said. “If you’re in Africa or just on a mo­bile In­ter­net con­nec­tion where band­width is ex­pens­ive, hav­ing a free source of bit­coin band­width re­duces your cost.”

As a de­cent­ral­ized cur­rency, bit­coin lacks many of the trans­ac­tion fees and reg­u­la­tions that ac­com­pany oth­er forms of money — which Gar­zik de­scribes as a “demo­crat­iz­ing ef­fect.” In­ter­na­tion­al data ac­cess could make bit­coin uni­ver­sal, which back­ers think would speed its growth and ac­cept­ance.

Presently, users are at risk from deni­al-of-ser­vice at­tacks, which have already hal­ted bit­coin trans­ac­tions at times. In such at­tacks, hack­ers tar­get bit­coin pro­grams with an over­load of com­mu­nic­a­tion re­quests, ren­der­ing them un­able to per­form their es­sen­tial tasks.

Gar­zik thinks his satel­lites could cir­cum­vent that, of­fer­ing a backup source of bit­coin data in case ground-based sys­tems get com­prom­ised or blocked. “It func­tions as a backup,” he said, “provid­ing al­tern­at­ive means for trans­mit­ting the block­chain.”

Of course, Gar­zik’s fail-safe-in-the-sky will need to be con­nec­ted to the ground to get the most up­dated in­form­a­tion.

As the satel­lites or­bit the Earth, up­load sta­tions will send them the latest trans­ac­tions — the block­chain “tail” — which they will then up­date and rebroad­cast around the world. Gar­zik es­tim­ates 10 such sta­tions will have to be in­stalled to achieve 90 per­cent con­tact with satel­lites.

Of course, the es­sen­tial com­pon­ent is the satel­lites them­selves. Gar­zik plans to use so-called cube­sats, toast­er-oven-sized satel­lites than can be launched for as low as $100,000. The satel­lites’ lifespan is short — one to two years at best — which has led some crit­ics to say the plan would re­quire con­stant re­in­vest­ment just to stay op­er­a­tion­al.

But Gar­zik says the mi­crosatel­lites are the easi­est path to or­bit­al ac­cess.

Be­cause of their uni­ver­sal size (10-by-10-by-10 cen­ti­meters), cube­sats can be de­ployed en masse from a launch­er known as a P-POD. When a rock­et launches its primary pay­load, it can also re­lease a P-POD of up to three cube­sats.

For now, that re­mains the most low-cost route to or­bit.

A single satel­lite, Gar­zik said, could be launched for around $2 mil­lion and provide bit­coin data up­dates for users every 90 minutes. For $5 mil­lion, he says he can launch eight cube­sats, which would be more than enough to give reg­u­lar up­dates.

His launch plans will de­pend on the amount of fun­drais­ing he re­ceives, and he hopes to start cam­paign­ing in Au­gust. The earli­est his satel­lites would launch is Au­gust of 2015, he said.

But it might be a little longer than that be­fore they get off the ground. Launch prices have dropped drastic­ally over time, and Gar­zik ad­mit­ted that “you pay more to launch soon­er.”

Even if the fun­drais­ing comes through, es­tab­lish­ing 10 up­load sta­tions around the world won’t be an easy task. In ad­di­tion to the in­fra­struc­ture hurdles, Gar­zik will have to find a trans­mis­sion meth­od that meets sev­er­al coun­tries’ fre­quency reg­u­la­tions. Gov­ern­ments have come up with dif­fer­ent ap­proaches to al­loc­ate in-de­mand ra­dio spec­trum, and nav­ig­at­ing vari­ous in­ter­na­tion­al agen­cies to es­tab­lish a uni­ver­sal, globe-span­ning net­work could prove a com­plic­ated task.

And even if his satel­lites are launched, Gar­zik will have to keep fun­drais­ing to buy near-yearly re­place­ments for the short-term cube­sats. Still, he’s con­vinced his pro­ject will suc­ceed — and re­vo­lu­tion­ize both on­line cur­rency and or­bit­al tech­no­logy.

“The wider you spread the bit­coin block data, the more re­si­li­ent is bit­coin as a whole,” he said. “This is for the bit­coin com­munity, but it’s also in­tend­ing to provide a high-pro­file pro­ject that really in­centiv­izes oth­ers to look at cube­sat designs.”